You are here: Home - News -

Borrowers do well on repayment front but not enough have savings safety net

by:
  • 06/06/2002
  • 0
Mortgage borrowers are finding it easy to meet loan repayments, despite being the group most vulnera...

Mortgage borrowers are finding it easy to meet loan repayments, despite being the group most vulnerable to overstretching themselves with other debt.

The findings come from a Council of Mortgage Lenders’ (CML) survey, which revealed mortgage borrowers are far more likely than other households to have additional loans, finance deals and credit arrangements as lenders regard them as an attractive proposition.

Although borrowers seem happy meeting their mounting repayments, the CML has warned that those with low levels of savings are more likely to have debts that consume a high proportion of their income, making them more prone to a loss of earnings.

According to research from the Department of Social Security, 37% of couples without children have less that £1,500 in savings ‘ typically enough to cover just two months’ mortgage payments. Almost half of households with a gross annual income of £20,000 also have savings below the £1,500 mark.

Michael Coogan, director of the CML, said: ‘It is reassuring that the survey found that most households are coping with debt. This is borne out by the decline in mortgage arrears, but neither lenders nor borrowers can afford to be complacent about the future.

‘Against the current economic backdrop, it would be worrying if there were large scale problems in coping with debt. The fact that some households are struggling, or appear vulnerable to adverse events like an unexpected loss of income, should encourage caution.’

Coogan said borrowers should take out mortgage payment protection insurance (MPPI) to provide security against their debts.

With only 31% of UK borrowers having MPPI in place, Paul Fincham, spokesman for Birmingham Midshires, agreed with Coogan.

He said lenders and advisers should encourage borrowers to take out cover, to provide protection should the worst happen.

‘There is a great deal of complacency about insuring the regular household income ‘ this is a dangerous position for many of us. Homeowners must take responsibility to protect their home and it is a small price to pay for their most valuable asset,’ he said.


Tags

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
  • RT @MAB_JChidgey: It's vital that action is taken so as to avert the tenure 'Leasehold' becoming discredited amongst new and existing homeo…
  • RT @OTJournalist: Problems in the free legals sector continue as one firm tells brokers not to call (and blames them for delays). https://t…
  • RT @OTJournalist: "our service to our lender clients is being affected by the high level of calls from mortgage brokers requesting updates.…
Read previous post:
Your career is in your hands

Richard Hall, head of Newcastle-based packager Best Advice Mortgage Centre, has come out with a rath...

Close